by Joe Sullivan
The downtown development plans unveiled by the Public Building Authority this week are so bold they almost bowl you over.
The $250 million private and $130 million public investment that's envisioned transcends everything that went into the World's Fair a generation ago as well as the city's $160 million new convention center. Everything from scads of retail shops, restaurants, and entertainment venues to downtown's largest office tower, hotel, and apartment building are on the drawing boards along with new garage space for 4,100 cars just to support them. And even that list doesn't encompass the centerpiece of the entire complex: prospective studios and tutorial facilities for Scripps Networks' three cable TV channels, the Do-It-Yourself, Food, and Home & Garden networks.
If all of thisand morewere part of some long-range grand design, the community could pause for breath in taking stock of it. But that is not the case. The whole nine yards of what's now being proposed is due to proceed with almost breathtaking speed toward completion in time to complement the opening of the new convention center in 2003. And the PBA admonishes against a piecemeal approach to the undertaking.
"An integrated development approach that includes office, housing, retail, restaurant, and entertainment components and attractions is necessary to create sufficient critical mass to support the development. Critical mass cannot be achieved by piecemeal development," states a PBA draft report on which the public will have less than 60 days to comment.
Once the PBA approves the plan, a pre-selected master development firm, Worsham Watkins International, will then have 90 days to submit firm plans for its implementation, including the $250 million in private-sector financing. Then, and only then, will the public have an opportunity to see renderings of what downtown will look like under the grand new scheme of things or learn what enterprises will be doing business on what terms on the publicly-acquired property on which most of the development is due to take place. After another 30-day comment period, the PBA would make its final recommendations to the mayor and City Council. All elements of the plan, obviously including city funding, would then be subject to their approval.
There's no doubt that massive, mixed-use redevelopment along the lines of what's proposed has the potential to do more for downtown's diversity and vitality than anything and everything else that's happened for the good since the city's retailers deserted for the suburbs in the 1970s. It's also clear that attractions such as the contemplated Scripps complex along with upscale shopping and vibrant nightlife are essential for the new convention center to succeed.
Moreover, as the PBA draft report points out, "The cost of such development will be substantial and will require substantial public investment in infrastructure. Successful developments in other cities have been the result of public-private partnerships." It goes on to caution, though, that, "Before committing to such a project, it must be clear that the project is economically feasible and that the economic benefits of the project will provide a substantial return on the public investment."
Unfortunately, the PBA hasn't provided sufficient information nor sufficient ways and means for the public to participate in the process of evaluating the feasibility and the desirability of the project as a whole or of its many component parts. The only forms of public input provided for are letters, email, and a telephone answering machine. No informational meetings, hearings, or forums are scheduled. Yet the report alone doesn't begin to portray various elements of the proposal in enough detail for people to reach informed conclusions about them. Consider, for example:
* A $16 million city investment is proposed to create what's called a Winter Garden within the World's Fair Park. But about all the report has to say is that it would be a "large, multi-story conservatory/greenhouse, which would contain year-round gardens." Such a garden could well be a major attraction for residents and visitors alike and also important to a Home & Garden TV participation in the project. But a much fuller picture is needed to justify a $16 million commitment by the city.
* A $12 million city outlay is presumed for new "shoppertainment" in Market Square. But the report alone seems full of double-talk where Market Square is concerned. On the one hand, it says that, "the central open area should be retained and improved, with enhanced facilities." But in the next breath it adds that, "As specific development proposals emerge, consideration should be given to an unobtrusive glass enclosure, which would make the space usable on a year-round basis." Moreover, it alludes to the need for restrictive covenants on the use of property in the square. But property owners aren't given any information about what these covenants might contain or how they would be implemented.
* Close to $70 million is proposed for four new public garages to support (1) the contemplated Scripps Networks complex; (2) a 16-screen cineplex; (3) a new 417 room hotel and adjacent 34-story office building; and (4) a 150- to 200-unit apartment building. (That's in addition to the two garages already in the works to support the convention center.) The good news is that the 4,100 new garage spaces would all be underground in order to provide pedestrian-friendly access to the new buildings and to conserve space. The trade-off is that underground garages cost about $20,000 per space, double what it costs to build up rather than down, with resultant subsidies even to paying parkers, let alone those such as movie-goers, to whom "free" parking would have to be provided.
Total public sector costs of $130 million, atop the $160 million cost of the convention center, would nearly quadruple the city's presently outstanding debt of just over $100 million. And the obvious question is how on earth is the city going to pay for all of this and at whose expense.
The PBA's economic analysis postulates that the downtown development plan will not only pay for itself but also cover more than $100 million of convention center debt service expense. This analysis purports to be conservative by only taking into account revenues resulting directly from new development. Property taxes, amusement taxes, lease payments and parking fees all contribute to this revenue stream, but by far the largest component is sales taxes that the city would recapture from the state under a 1998 act of the legislature.
The PBA's projections show that this recapture would generate $8.7 million a year toward covering an assumed $11.4 million in annual debt service expense on the convention center. Over the 30-year life of the $290 million in bonds needed to finance both convention center and downtown development, total principal and interest payments by the city would be reduced to $235.6 million from $356.2 million. Moreover, if state sales tax recapture can be applied to cover the $130 million in downtown development debt, which is a sticky question under the state law, the overall debt service cost incurred by the city would be further reduced to less than $100 million.
The PBA's projections are based on an analysis of retail sales resulting from all facets of the development that was prepared by Economic Research Associates, a Chicago-based consulting firm. This analysis is crucial to the prospects for the entire undertaking and should be the subject of a public dialogue as well (although Worsham Watkins' ability to get commitments from tenants and lenders will provide an acid test of its validity).
The PBA and Worsham Watkins now need to do as good a job of communicating what's in their grand design (and listening to feedback) as they have in making it take shape over the past year-and-a-half. The media also has an important role to play in this communication process.